For restaurants — in particular quick service restaurants (QSR) and fast casual restaurants, a key ingredient in protecting the bottom line is loss prevention, especially minimizing employee-caused losses. In fact, according to the National Restaurant Association, 7% of restaurant sales are lost due to employee theft. While restaurants often lack the benefit of trained loss prevention personnel working with them to monitor and control activity that erodes their bottom line, technology and approaches available today can help large and small restaurant chains alike to minimize employee-caused losses. Before you prevent losses, though, you have to identify the possible causes. Employee-caused losses can include operational performance issues and collusion with vendors, robbers, and burglars, but simple cash transactions are more often the source of employee-caused losses in restaurants.
Tips on Loss Prevention for Restaurants
The following items are some of the most common types of transactions at high risk for employee-caused cash theft, and how to identify them: Voided sales – These are a common form of skimming. What makes a void so susceptible to theft is that, by definition, a voided transaction did not actually happen and is not recorded on the books, so employees can merely relieve you of the cash overage, and everything seems to balance. What to watch for:
- Did the customer walk away with purchased items?
- Is there a customer on the other side of the counter when the void occurs?
- Is the employee pocketing the cash or making a tally to take later?
Zero dollar (or small amount) transactions -- Zero dollar (or small amount) transactions are a more subtle means of skimming and under-ringing. A zero dollar transaction is akin to a void transaction where items are cancelled after the customer walks away. The small amount transaction can, at first glance, look valid, but under closer scrutiny you may discover a problem. What to watch for:
- Did the customer receive items when the receipt shows a $0 total?
- “Sweethearting", or giving away food without a charge: Did the customer receive more food than purchased, e.g. an entrée, side, and drink but only paid for a drink?
- Did the customer pay for food on the previous transaction, and then remember to add a small value item like a drink?
Zero dollar (or small amount) transactions with a coupon -- Zero dollar (or small amount) transactions with a coupon or a comp is another way to build a cash surplus for theft. What to watch for:
- Is the coupon item in the transaction as a sale?
- Is the coupon for a current promotion?
- Is the coupon generic?
- Was the coupon added after subtotal?
No sale transactions -- No sale transactions are an easy way for employees to open the till to, for example, break larger denomination bills for smaller change. The problem is, “it’s an easy way for the employee to open the till.” What to watch for:
- Did the customer receive food that was rung in as a No Sale?
- Is the employee alone or isolated?
- Did the employee pocket cash or leave it on top of the register and come back later to pocket it?
- Was the No Sale caused by a customer?
Cash refunds -- Like the other high risk transactions, cash refunds are a relatively easy way to get at cash. What to watch for:
- Is a customer and an item present at the time of the refund?
- Does the video of the item being returned match the receipt?
- Is the person doing the refund authorized to perform refunds?
- Was the refund done before or after business hours?
Now you know some common sources of employee-caused cash theft losses, but cash thefts are not the only areas of concern. When it comes to loss prevention for restaurants there are several other types of activities to consider. In my next article, I’ll review other sources of employee-caused losses.